On September 25, PetroChina South China Marketing Company lowered the price of oil-extended SBS, ending the 3-month’s price uptrend. With the weak prices of synthetic rubber and butadiene, will the road modification-used SBS undergo a price decline?
SCI holds that the price of road modification-used SBS is mainly influenced by demand and supply.
Demand for road modification-used SBS may show regional differences after October. First, the procurement in Northwest China and Northeast China will end in late September or H1 October. Second, in Shandong and other provinces where there are many modified bitumen enterprises, the procurement volume increased notably in H2 September after the environmental inspection teams from the central government gradually left in H2. Third, as the market atmosphere is still active in some places of southern China, the rigid demand will still exist in November–December.
The supply will change noticeably. The change in road modified-used SBS’s demand structure will result in resource reallocation. With the demand declining in Northwest China market, the resources of PetroChina Dushanzi Petrochemical and Sinopec Baling Company may flow into eastern China. The SBS supply volume at the PetroChina Dushanzi Petrochemical is expected to increase in October. Sinopec Baling Company also plans to lift the output of road modified-used SBS. The total SBS supply volume in October will increase from September.
SCI believes that both the supply-demand structure and the market performance are unfavorable for the road modified-used SBS. However, the rigid demand will still exist in the future, and the inventories at most of the SBS producers and traders are lower than those in the same period of the past years. Thus, the market price of road modified-used SBS is unlikely to slump in October. The main challenge is that the low-priced SBS will impact the market prices when the capacity of the newly-added units gradually releases.